As
a beginner, it’s easy to be overwhelmed when it comes to investing in the stock
market. This guide will help you to navigate that space comfortably. To get
started, it is important to understand that money sitting in the bank does you
no good.
For
starters, consider saving as a means of getting you started on an investment.
Once you have saved up enough to let you jump in on an investment, however
small, don’t let that money sit in the bank.
What is investing?
Investing
is simply making a purchase that is anticipated to give you a profit sometime
in the future. Traditional investments could range from purchasing real estate
assets, owning a business, or lending money to a company or person with the
goal of gaining interest payments.
Do I need to invest?
Yes,
you need to invest. Saving money is the first step towards accumulating
something to put in an investment, but in itself, saving cannot build you significant
wealth. Think of investing as the way in which you get to multiply or add on to
your savings.
A
dollar in the bank today will only earn you a little more tomorrow. While investing
the same amount of dollars could earn you much in the future, investing money
goes to work and earns you more dollars.
The
effect of this is that your assets grow and rise above the inflation rate.
While savings might simply decline in value, with investments, savings simply
build on themselves as opposed to declining.
At what point to start
investing?
Investing for beginners is the way to go. That means everybody has to start somewhere, and if you’re wondering when to start, the answer was yesterday. Well, it is not too late if that didn’t happen already.
Start
when you have a good financial base. It’s best to consider investing if you’re
free from any high-interest debt. Ensure that you have a goal in mind and
create an emergency fund for yourself. With these, you’ll be off to a good
start.
Having
a goal cushions you from the fluctuations in the market, allowing you to let
your money run in the investment for the long term.
- Start
investing at a young age
If
you’re young and reading this, then read on. If age seems to have caught up
with you, well, it’s never too late. Investments are premised on the
compounding factor, which depends on time to ensure growth.
That
means the earlier you get started, the more wealth you get to accumulate even
with a minimum principal amount. In addition, this allows you more time to let
your money recover its value after a harsh economic downturn.
- Create
an emergency fund
Investments
take time to mature and bring desirable results. That means you need to ensure
that once you have that money in, you will not be eyeing it back for a long
time.
This
means that having an emergency fund will help you handle any tough financial
times without having to feel the need to pull out from your investment.
- Clear
off your high-interest debts
When
it comes to investing for beginners, this is an important tip. Clearing off
your debts is a good investment by itself. Piling up debts will only tear you
down financially. Seeing that debts only accumulate interest, high-interest debts
could, therefore, be even more catastrophic.
Do
not put money aside for an investment without clearing such debts first; they
will only slow you down in the process, causing you to even give up on your
investments.
What amount should I
start with?
The
important thing when it comes to investing is starting now. It is important to
dream big but it’s equally important to start as soon as you can. Starting
small allows you to watch the potential of your investment
grow.
For
instance, for someone at the age of 25, starting with $500 can seem like an
insignificant amount to make them wealthy. However, assuming that they added
$50 to it every month after; that would get them to almost $174,000 by the time
they retire.
If
they choose to wait until they are 35 so that they can accumulate double the
principal amount to start investing, then that would only give them a fraction
of the $174,000 by the time they are retiring.
If
starting small makes a significant difference, especially if it means investing
sooner; then go for it. You won’t regret your decision when you reap your
rewards.
